CFPB's Rohit Chopra Discusses Issues with Leagues & CUs

(Bottom center): Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra
(Bottom center): Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra

Leaders from the California and Nevada Credit Union Leagues and member credit union CEOs were honored to be the first state credit union trade association having a one-hour session with Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra yesterday.

"I want to thank Director Chopra for taking the time to meet with us this week," said Diana Dykstra, president and CEO of the Leagues. "We look forward to more engaging discussions with special guests and experts during our bimonthly CEO Calls."

Chopra outlined his priorities, saying his current focus is largely on the economic impact of inflation and how it affects consumer risk in the financial services marketplace.

The following highlights the rest of the discussion from beginning to end:

  • Auto Repossessions: As used car prices rise, so does the risk for financial entities to illegally reposes vehicles from consumers by not using appropriate documentation. Also, the bureau is watching how vehicle repo technology evolves to make sure repos are fair and legal. It believes in fostering a more competitive lending marketplace so consumers have a variety of comparisons and options at their disposal before getting into a loan.

  • Credit Card Lending: As outstanding credit card balances rise, the bureau wants to make sure consumers are able to fairly compare interest rates and obtain a credit card that “really works for them.” It is considering rulemaking authority to help smaller financial services providers in this arena, stimulating low-cost acquisitions when it comes to credit card portfolios and other banking products (Section 1033).

  • Mortgages: The bureau wants to foster a marketplace where consumers have plenty of competitive options. It is watching the refinance market as mortgage rates rise from their recent historic lows. The bureau is also watching relatively healthy forbearance exits and repayment volume coming out of The CARES Act financial relief from 2020. Additionally, the bureau is not looking to make any major changes or updates to mortgage rules at this time.

  • Credit Reporting: This topic is the bureau’s main focus right now, especially when it comes to medical debt. The bureau wants to make sure there is reasonable accuracy in credit reporting within the myriad of “back and forth” between creditors, credit bureaus, hospitals, and health insurance companies due to consumer complaints of material errors on reports.

  • The Buy Now Pay Later (BNPL) and Payments Arenas: With BNPL surging in adoption on e-commerce websites and at brick-and-mortar retail stores, the bureau thinks that finance companies and fintechs (or even financial institutions) partnering with retailers to offer this product should know a borrower’s full range of liabilities. Additionally, the real-time payments arena is of interest to the bureau since large technology companies have an incentive to track consumer spending data with digital background tools. What tech giants and other platforms do with this data is important. Also, monitoring whether cryptocurrency edges its way into conventional payment platforms and systems remains important too.

  • Fees: The bureau is concerned many consumers are surprised or caught off guard by certain fees, and it wants to foster a more transparent environment with respect to up-front fee disclosures and the “why” behind fees (such as credit card late fees and others). Naturally, overdraft fees and non-sufficient funds (NSF) fees are part of the conversation as well. The bureau wants to see robust competition in the marketplace that serves consumers fairly when it comes to fees and associated product offerings, as well as solid reasons supporting them.

  • Rules, Regulations, & Credit Unions Versus Other Financial Institutions and Companies: Chopra said he is disinterested in having complicated consumer protection rules and prefers those rules be simpler, easier to understand, to follow, and to enforce. He believes complicated rules can favor the largest players in financial services since those entities are able to leverage operations and make quick changes compared to smaller institutions. However, the bureau will lean more of its focus on non-depository institutions (third-party financial companies, BNPLs, fintechs and others) versus depository institutions (credit unions and banks) since it’s easier for the former to exploit consumers through financial and/or regulatory arbitrage.

  • Overall, the Bureau Will be Focusing On: 1) increasing competition across financial services; 2) dealing with repeat offenders that routinely violate orders; 3) building an environment where consumers and communities are individually catered to through fair technology by all sizes of institutions and companies in the financial services marketplace.

  • Financial Scams: Chopra invited credit unions and the Leagues to alert the bureau if they notice financial scams early-on in their lifecycle. He noted that California, Nevada, Arizona and Florida are states where marketplace schemes and fraud oftentimes occur first.

  • CFPB’s Credit Union Advisory Council: Chopra reiterated his commitment to listening to comments from the bureau’s Credit Union Advisory Council, acknowledging that it meets in approximately two weeks. Additionally, I encouraged him to fully utilize this important advisory council going forward.

The CFPB director also engaged with four credit union CEOs who had comments and questions during the last leg of our virtual meeting, including Patelco CU’s Erin Mendez, Orange County CU’s Shruti Miyashiro, Greater Nevada CU’s Wally Murray, and First Tech FCU’s Greg Mitchell.

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